Bundesbank forecasts recovery of the German economy in coming months

Bundesbank forecasts that German economy will recover in the coming months, after weak second quarter and the impact of the British decision to leave the European Union will be limited in the near future. The largest economy in the Eurozone was facing a decline in industrial production, weak orders and a decline in exports, which fueled suspicions that Germany might be trapped in a serious global slowdown. However, Bundesbank rejected those concerns, stressing that the one-off factors led to poor performance while at the same time ensure that the economy continues to stand on a firm foundation.

In its report, Bundesbank stated that it expects production to increase during the summer. According to the central bank, the driving factors of the internal market remain intact, among which is stable labor market, rising wages and expansion of the fiscal policy. In the June report, the Central Bank predicts annual growth of 1.7 % in 2016 and also shares the opinion European Central Bank (ECB) that the unprecedented stimulus program revives economic growth and inflation. The forecast coincides with the expectations of the government in Berlin.

According to Bundesbank, the measures of ECB in December will add between 0.1% and 1.0% to the annual inflation between 2016 and 2018. The contribution of the measures in March is expected to be smaller. The bank indicated that an impact assessment by the British referendum is very hard to do now, but added that so far the impact in the short term is limited.